Peter Sondergaard

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Peter Sondergaard
Senior Vice President and Global Head of Research
25 years at Gartner
29 years IT Industry

Peter Sondergaard is a senior vice president in Gartner, where he is the global head of Gartner Research. Mr. Sondergaard is responsible for people management and the direction of the global research organization, which includes Semiconductors, IT Infrastructure and Operations, Communications, Software and Services Management, Business of IT, Research Operations Management, and IT provider and end-user organizational roles.

Bimodal Business leads to Bimodal IT

by Peter Sondergaard  |  December 17, 2014  |  Submit a Comment

In a recent blog post, I discussed the concept of bimodal IT as a way for CEOs and CIOs to manage the digital divide between what IT provides and what the enterprise needs right now. Bimodal IT has been a Gartner focus for our clients the last 18 months

In bimodal IT, mode 1 is traditional IT, where systems must be reliable, predictable and safe. Mode 2 is non-sequential, emphasizing innovation, agility and speed. It’s all about the flow in mode two, more “fluid” than solid, like a startup.

CIOs need to function at two speeds to seize the opportunity in digital business, and nearly half of them are currently doing so. In a Gartner survey, 45 percent of CIOs state they currently have a second fast mode of operation and, by 2017 we predict that 75 percent of IT organizations will have a bimodal capability.

The digital divide continues to widen

The ability of executive teams to forecast the future of their competitive environments, markets and value chains is diminishing, almost on a quarterly basis. These same teams are under pressure to find ways to mitigate stakeholder risks and exploit business opportunities. Meanwhile, disruptive digital trends crowd the horizon. The consumerization of IT, the Nexus of Forces (social, mobile, cloud, information and analytics) and the Internet of Things have triggered explosive digital demand.

All of this leads to the digital divide widening between what the IT organization can provide and what the enterprise wants and needs. This is why bimodal IT is a powerful capability for addressing these issues. It entails operating the IT organization in two modes that are comprehensive and coherent, but deeply different, while exploiting the benefits of both.

The risk of not responding; Shadow IT

Internal pressures are forcing the hand of the IT organization. The growth in shadow IT is a manifestation of users’ desire to control their technological destiny, of their growing confidence in their ability to do so and of their dissatisfaction with the IT organization’s current methods. Shadow IT is the long-standing phenomenon that is currently growing at a rapid rate, whereby unofficial investment in IT occurs around the enterprise often “under the radar.” This is not merely decentralized IT. Shadow IT sidesteps the designated IT organization to derive value from technology. This is what I referred to in my previous blog post about business units acting like start-ups in your own organization.

If IT doesn’t act, the digital void will be filled anyway

The problem with shadow IT for CEOs and CIOs is not just that activities are happening outside the direct control of a formal IT organization. It’s that in acting independently, shadow IT often makes a huge unmanageable mess leading to integration, security and technical debt problems down the road.

CEOs need to know that is in the interest of the enterprise, not just the CIO and their team, for IT to be a full-fledged partner in the creation of the digital enterprise and bimodal IT is the way to achieve it. Indeed, this may be the only way to avoid a future filled with digital detritus that could impact the enterprise’s competitiveness in the near future

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How Can CIOs Compete When Every Business Unit Is A Technology Startup?

by Peter Sondergaard  |  November 22, 2014  |  1 Comment

When you think about a digital startup, the first image that usually comes to mind is one of a loft-like open space populated by casually dressed smart young things with faces illuminated by the screens of their MacBook Pros jammed along communal tables. But stereotypes are always dangerous. What if I told you that you’ve probably got several digital startups in your own organization?

Right now, there are digital startups sitting inside your marketing department, in HR, in logistics and in sales. Leaders in those business units are driving their own digital innovation. They approach technology differently, trying new analytic tools, cloud solutions and technology services. And they’ve got a whole technology industry geared up to help them.

Every business unit is a technology startup

Technology providers are actively driving this change. Millions of salespeople, hundreds of thousands of resellers and channel partners are selling directly into business units, not just to CIOs or IT. That’s half of the technology industry’s sales capacity focused on also selling directly into the business unit! They know that IT budgets are only going to grow 3% on average in 2015, and they are looking for new sources of revenue within other parts of the business. And you know what? They are finding eager buyers in marketing, sales, HR, logistics and product leaders.

Enter bimodal IT

CIOs need to respond to this cataclysmic shift. And if CIOs can’t beat them, they can at least learn a thing or two from them. The answer is bimodal IT.

The IT organization can’t turn into a digital startup overnight and, besides, there’s a raft of business-critical responsibilities that it simply can’t (and absolutely should not) divest. This is the fundamental challenge for CIOs, but also the solution. Bimodal IT is a concept that helps CIOs address the intrinsic tension that exists between what IT needs to provide and what the organization needs to grow.

Mode one is all-things traditional, emphasizing safety and accuracy — what a traditional IT organization does best. Mode two is nonsequential, emphasizing agility and speed, like a digital startup. Put them together and what you have is bimodal IT. One organization operating at two speeds, but coordinating, communicating, leveraging shared knowledge and focused on one shared, not competing, goal; improving performance.

Sounds simply, but easier said than done? Absolutely! In my next post, I’ll dig deeper into how CEOs can work with their CIOs to achieve a bimodal IT organization and share some examples of organizations that have enjoyed early success with this approach.

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Will Digitalization Replace or Improve Public Sector Services?

by Peter Sondergaard  |  November 10, 2014  |  2 Comments

Will digitalization replace services provided today by the public sector? Will those alternative services, provided by private business, only be available to, or chosen by, higher-income families? These questions were posed by a senior executive from the public sector during our recent Gartner Symposium/ITxpo conferences. They are fascinating questions, particularly coming from a leader in the public sector, and the answers will undoubtedly be influenced by where you sit on the political spectrum. Let me try to remain politically impartial as I outline the situation.

Digitalization Leading to Transportation as a Service for Some, Not All

Born-digital services such as Uber, Lyft and Zipcar have captured the imagination of consumers in this increasingly sharing-based economy, creating a significant change in the usage of, and spending on, transportation in urban areas. They are augmenting public services, leading to what could be described as “transportation as a service.” BlaBlaCar.com takes this concept several steps further by providing shared rides between cities in several European countries, replacing mass public transportation.

These services are only available to the digital consumer, excluding those without access to smart devices. Transportation as a service undeniably increases the choices available to digital consumers, but will these new methods ultimately deprive public services of funding to the point where they are no longer sustainable for the millions of people who rely upon them? Is this simply another step in the already long journey of privatization that we have taken, where the metaphorical “have’s” travel above ground and those who “have not” travel below? Or can the public sector compete — and thrive — by leveraging digitalization to transform the efficiency, service and cost of the transport it provides to offer new options that are fit for purpose in the new digital industrial economy?

Digital Evolution or Revolution

Imagine other areas of public sector services that could be replaced or radically augmented by digitalized services. Robots that care for the elderly in retirement. Communities ”policed” by smart surveillance devices and drones. Education that is delivered in-home via devices and supported by communities based on topic, not geography. All delivered at a price point far lower than those services are provided by the public sector today. In some countries, these examples don’t sound farfetched at all. In fact, they are either here already or on the verge of adoption.

In other areas such as Canada, Western Europe, Japan and Australia, this digitalized future in which the private delivery of public services occurs is revolutionary. But this may be exactly what is happening in the digital industrial economy.

Forces Combine

The ability to provide a service at scale is increasing in the digital economy, and digital consumers are increasingly able to use these services, provided they have the financial means. The last point is crucial. Alternative services to those provided by the public sector will be increasingly available to a larger number of people who can pay, leaving a less-than-certain future for the services provided by governments for those who cannot.

On the flip side, maybe private services will be able to offer services – such as schools – at a lower price point than public services in areas of scale, such as in densely populated cities or where digitalization eliminates the need for physical infrastructure, which could provide a greater level of service to everyone.

This shift could happen quickly due to the accelerating digitalization of businesses, a rapid increase in sophistication of the digital consumer and the compounding likely, slower digitalization of the public sector. Digitalization will place huge pressure on governments and leaders in the public sector to change faster than at any other time in modern history. Politicians and civil service leaders must face the inevitable; embrace digitalization or risk governing an increasingly fractured society.

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CEOs on point – Securing the Internet of Things on your watch’

by Peter Sondergaard  |  September 2, 2014  |  1 Comment

A great billboard caught my eye this week on the drive out of Manhattan. You’ve probably seen the advert yourself if you live in the US. It’s for the Mini and, underneath a great picture of the car, the tagline reads “high-speed mobile device.” This got me thinking about the impact of the Internet of Things on virtually every aspect of business.

CEOs are moving from leading companies that make cars, toasters, elevators, construction equipment, washing machines and more to companies that are, basically, producing Internet-connected devices. With this fundamental change, CEOs will need to start dealing with the same challenges that IT has dealt with since the advent of the Internet — securing your devices and networks from malicious attack.

The Internet of Things will lead to hundreds, thousands, maybe even hundreds of thousands of physical devices in your enterprise being connected to the Internet. And every single one of those devices will be a potential point of vulnerability. It doesn’t take much imagination to see the compromising impact of powering down or interfering with millions of devices through a single Internet of Things vulnerability, potentially resulting in physical damage to environments, injuries or death.

But securing the Internet of Things represents new challenges in terms of the type, scale and complexity of the technologies and services that are required. The Internet of Things means sensitive information, such as device operation details and personal data, is now crossing from secure networks to moving between third parties. The risks of having information travel between externally controlled appliances, customers and sensory-based technology is challenging traditional, layered-protection security management. 

Recent research that will be explored in depth at Gartner Symposium/ITxpo by my colleague Earl Perkins indicates that, by year-end 2017, more than 20% of enterprises will have digital security services devoted to protecting business initiatives using devices and services in the Internet of Things. 

All of this adds up to one fact. As a CEO, you need to understand that the nature of what security means to your enterprise is rapidly changing with the advent of the Internet of Things.

Change always means new challenges in terms of organizational structure and governance. Where should your chief information security officer (CISO) report if their responsibilities are expanded? Not only will the CISO need to take into account the addition of tens of thousands of physical Internet-connected objects that now need to be secured but also that the organizational responsibilities for these objects may be with diverse business leaders. Does it still make sense for the CISO to report to the CIO? Today, 36% of CISOs report to business functions outside IT, of which 21% report directly to the CEO or Board of Directors.

As a CEO, you will also need to support the creation of a new security architecture spanning your digital architecture. This will create a platform to address the expanded scope of technology, as well as the vast amount of new ”intelligent” things embedded in your enterprise.

Finally, you will need to determine how your enterprise will move to proactive security and embed this program into an overall risk management strategy.

The bottom line is that the fundamental meaning of security is changing as things both inside your enterprise and those you create become connected to the Internet. It’s critical that you fully grasp both the speed and impact it will have. As the CEO, you must take the lead in this discussion or risk your own “high-speed mobile devices” crashing with catastrophic results for your enterprise.

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Don’t Overlook the Importance of People in the Digital Business

by Peter Sondergaard  |  July 14, 2014  |  1 Comment

A successful digital business requires transformational change in the culture, mindset and workforce capabilities. CIOs and business leaders must renew the talent strategy and programs to acquire, nurture and develop requisite workforce core competencies to make the shift.

This is the conclusion and key recommendation of a research note (client access required) published recently by my colleagues Lily Mok, Diane Berry and Janice Francis.

It caught my attention on a flight en route to a conference in Italy because of the sheer magnitude of the advice. I had to read it twice to fully comprehend what it entails: CIOs and business leaders must renew the talent strategy and programs to acquire, nurture and develop requisite workforce core competencies to make the shift (to a successful digital business).

In a word: Whoa! (If you didn’t already know, this is a very technical term for a “massive change!”)

I’ve written on this blog previously that by 2020, more than 7 billion people and businesses, and at least 30 billion devices, will be connected to the Internet. With people, business and things communicating, transacting and even negotiating with one another, a new world comes into being — the world of digital business.

Although technologies will continue to play an essential role in the world of digital business, the authors of this research indicate that business growth objectives will go unmet if CEOs and CIOs ignore the talent and expertise that underpin the success of digital business. The temptation for many in building the digital business will be to focus on technologies first and foremost rather than on people.

Put another way, investing in technology capabilities without investing more in people who understand them, define them and shape them will undermine the efforts of senior leaders to build a digital business.

Lily, Diane and Janice’s research details how CIOs need to quickly address this “people” blind spot by:

 Understanding requisite cultural and mindset change, from inside-out to outside-in

  • Identifying competencies for making the shift in culture and mindset
  • Renewing strategy and practices to acquire and develop people with requisite competencies

This represents a huge undertaking for the CIO and the leadership team, but even more important one that CEOs and CIOs clearly can not overlook. They must focus on:

  • Developing the right digital talent and skills across the organization
  • Replacing and adding digital talent in areas strategic for a digital enterprise
  • And developing digital leadership skills for all business leaders

We’re in the midst of developing our opening keynote for the upcoming Gartner Symposium/ITxpo series and we’d like to include your experience in the theme.

  • How are you addressing the culture, mindset and capabilities of your team in the shift to digital business?
  • How have you defined the challenge for your leadership team and set objectives to drive change? Or have you simply started the process of defining what digital business means for your organization and experienced how difficult this first step is?
  • What barriers have you faced and how have you started to break through them to create the kind of organization you and your organization needs to be successful?

If the transformation inside your organization is not equal to or larger than the transformation of society towards the Digital Industrial Economy, you are falling behind. Transformation is about the right leadership skills. Get your act together now!

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What is d-business?

by Peter Sondergaard  |  May 17, 2014  |  1 Comment

Where should a CEO start with d-business? It sounds sort of obvious, but start at the beginning; define exactly what you mean by d-business.

Not enough CEOs spend time discussing and agreeing on a corporate definition of a new trend to make sure the entire leadership team is on the same page about what it is and why it matters to them. Far too often organizations get lost in endless internal debates where senior leaders use their own—often contradictory—definitions, ultimately distracting their teams from the opportunity that exists if action is taken sooner rather than later. The onslaught of digitalization is certainly one of those trends that require this level of attention, definition and leadership from the CEO; it’s critical that the executive leadership team start by defining the trend for the organization.

We can help you to start the ball rolling.

As d-business is an evolution from e-business, the two will often by compared and confusion will arise from incorrect usage of each. At Gartner we have adopted the usage of the US Census Bureau’s definition of e-business, which is:

Electronic business or e-business is any process that a business organization conducts over a computer-mediated network. Business organizations include any for-profit, governmental, or nonprofit entity. Their processes include production-, customer-, and internal or management-focused business processes

The Gartner definition of d- business is:

Digital business, or d-business, is the creation of new business designs by blurring the digital and the physical worlds due to the convergence of people, business and things.

So what is the main difference? Things!

E-business was the interaction between people and business, specifically business processes using the internet as the integrating technology or network. D-business is the relationship between people business and things. It is about the connection of things to the internet and how those things directly interact with people and business, and indirectly how they create data or information that allows new value to be created.

D-business has a number of specific attributes. They are:

  • Nearly all physical and virtual assets in the value chain are digitalized. Intelligent “things” are incorporated into end-to-end processes.
  • The business creates and is dynamic and responsive to “business moments,” based on current context.
  • Customers and constituents are engaged principally through digital means. Most sales, delivery and service functions are fully automated. Digital generates revenue and/or tangible value for the organization. Most human- or analog-based processes are eliminated.
  • Employee engagement occurs principally through digital means. Team collaboration is done virtually, in the moment.
  • Operational processes are digitalized. Traditional analog and manual processes are automated, including both physical and human elements. Many decisions are algorithmic, based on automated judgment.
  • Things become agents for themselves, for people and for business. The added connectivity, communications and intelligence of things makes many of them agents for services that are currently requested and delivered through people.

Have you led this discussion with your executive leadership team? How did it go? What did you learn? How did your definition change to reflect the perspective of your colleagues across the business? Let us know.

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Are CEOs serious about d-business in 2014, or still stuck talking e-business circa 2004?

by Peter Sondergaard  |  April 29, 2014  |  5 Comments

Every company is becoming a technology company. This is the message I take away each time I meet a CEO or senior business executive to discuss their strategy for growth. It’s the direction that every leading organization, business and government agency is evolving toward. I’m seeing a shift from the old e-business to a new digital business, or d-business, mindset, where leaders no longer simply utilize technology to deliver efficiency and improve functionality, but digitally reimagine every aspect of the enterprise, from product and service creation, to production and delivery.

We decided to dig deeper and look beyond the conversations I’m having with CEOs to determine the broader nature of this trend. Our logic is that if this is indeed true, if organizations are increasingly moving to a d-business mindset, then surely their public statements will talk about digitalization in some way. Their annual reports should contain some degree of detail on initiatives regarding digitalization from a competitive perspective, how business opportunity is being created from digitalized processes and value chains, and how new business models and digitalized products and services are driving growth.

So we read the 2013 reports of 25 randomly selected companies from the global top 500 to look for indications of their focus on d-business. And, I suppose both surprisingly and unsurprisingly, we found very little about d-business at all. Here’s what we found

  • 15 of the 25 companies have no mention of technology, IT or digitalization in their annual reports. They do have a standard mention of IT systems in the risk section — but this appears in every annual report.
  • The 10 companies that do mention technology, digitalization, Internet of Things or big data in their annual report are in the financial services industry, communication service providers or outliers in their industry.
  • When companies do mention digitalization, it’s in the chairman’s and/or CEO’s message. But it’s always toward the end of the message and ranked lower than all other areas of focus.

We were surprised because the shift to d-business appears to be across all industries, so we expected to see at least some mention of it in the majority of annual reports. On the flip side, we were not that surprised because we accept that annual reports tend to be conservative and backward-looking, typically not revealing information that is truly strategic.

So because annual reports are lagging indicators that don’t point to a future necessarily characterized by d-business, we decided to look at two Gartner surveys that focus more on emerging trends.

First, Mark Raskino and I both recently wrote about our annual CEO Survey, research that Mark leads. Mark found that CEOs are indeed more focused on technology but still lagging in their understanding of d-business. As Mark states, CEOs think e-business circa 2004, not d-business 2014. So at a high level, our CEO survey results suggest a continued need for CEOs to be more engaged in how digitalization can fundamentally change their business.

Secondly, in the Gartner benchmark business, we have performed over 250 digital benchmarks. One of the key questions we asked all participating organizations about is their ability to execute and their completeness of vision today and in 18 months in terms of moving to d-business. The data suggests a significant change is expected in the next 18 months that will far outstrip the existing capabilities of their organizations. It’s clear to us that organizations are overoptimistic about how fast they can achieve business change. They do not have the skills and change management culture to make such a leap. This is squarely an issue for CEOs, who need to step up to provide direction on d-business.

So Gartner research recommends that CEOs and boards do three things.

First, they need to be explicit about the business opportunity technology (not just information technology) presents. If they are serious, then investors need to know. If they want to capture the opportunities that exist, they need the public — their customers — to know. They need to make this explicit in their annual reports.

Secondly, they need to focus on developing the digital skills of their organization. They need to start today. Change management for d-business needs to happen now. Ensuring the right management skills exist in the organization is critical.

Lastly, pilot, and pilot now. D-business is a journey. Starting is important! And starting is not e-business of 2004. D-business of 2014 requires entirely new digital product development, new digital service approaches and reassessing where digital technology can integrate the entire value chain.

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What CEOs think of Digital Business

by Peter Sondergaard  |  April 14, 2014  |  1 Comment

This week we published the 2014 Gartner CEO and Senior Executive Survey. Among the key findings is evidence of a bullish attitude by CEOs and senior executives toward technology-fueled business growth in 2014 and 2015. The same bullish attitude can’t be said for investors in tech-related stocks recently.

What really caught my eye in this year’s survey is that IT-related issues, including mentions of digital, are much more prominent as key priorities for CEOs. Gartner Fellow Mark Raskino and his research colleagues who authored the report found that 7 percent of CEOs rank IT as one of their top priorities. This might sound infinitesimally small (as context, the broad topic of “growth” was ranked as the top priority for 33 percent of CEOs), but this supports the broader trend that our research organization reports, in addition to my own observations working with CEOs around the world.

CEOs are undoubtedly taking a greater interest in applying technology more aggressively in their organizations. In the survey, nearly 50 percent of the IT-related priorities that CEOs gave specifically mentioned digital, online, social, cloud and mobile. Overall, CEOs referenced technologies frequently associated with client facing and revenue generating programs.

Drilling a little deeper into the survey, CEOs increasingly reported their growing investment in front-office technology-related capabilities that are used to help in sales and marketing. The research also noted strong interest among CEOs in basing business operations in the cloud and in using data-driven decision-making via business analytics, big data and data science. Process-centric themes, which tend to associate with back-office efficiency uses of technology, are much further down the list where we see items such as business process outsourcing, dynamic business process management and electronic service enablement.

What does this tell us?

CEOs are making the transition to a progressive mindset of investing in technology to drive growth and away from only thinking about generating internal cost reductions and efficiencies with IT.

This level of engagement by CEOs with technology has probably not been seen since the late 1990s. As Mark notes, technology has always been visible in the last decade of Gartner CEO surveys, but not so far to the foreground as it is this year.

As any successful business leader will tell you, a great attitude and mindset will only get you so far; there’s got to be substance to back it up. This is at the heart of the challenge for CEOs. Many leaders are lagging behind in their understanding of what digital business means.

This is where the CIO comes in. CIOs must take the lead in closing this huge gap in understanding by educating the CEO, their board, executives, senior and middle managers on the transformative value of digital. A decade of believing that IT was a commodity function has left many business leaders with a very polarized—and increasing outdated—view of what technology can do to support organizations goals.

As I noted in an earlier post, CEOs see digital as a team sport and this survey indicates that the CIO still has the highest visibility in terms of opportunity to lead the charge. When Gartner asked CEOs who they would allocate relative responsibility for leading digital innovation and change over the next two years, the CIO came out on top. However, many other roles are heavily involved, including chief digital officers (CDO), so CEOs clearly see digital as a collective operating committee endeavor.

One of the key conclusions that Mark and our colleagues in research make is that expecting the CIO to be the prime mover in digital is a fairly sudden and major change of expectation and emphasis. Digital is strongly associated with innovation. Two years ago, the Gartner 2012 CEO survey found CIOs were low on the list of perceived innovation leaders because they were tasked as IT cost managers and service quality assurers. This is a huge shift in expectation and, as we all know only too well, change is hard—especially when it happens to you.

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CEOs: It Takes a Team to be Agile

by Peter Sondergaard  |  March 3, 2014  |  2 Comments

I recently participated in an event in San Diego with more than 80 global CIOs who represent some of the largest companies on the planet. I enjoyed sharing the conclusions from our recent CIO Agenda Survey with this senior community and we had an interesting discussion on the latest trends in technology, evolving business demands and the major opportunities and challenges facing CIOs. Here’s a short video clip from our discussion to give you a flavor.

With so much experience in the room, I knew I was going to learn a lot from their questions and the debate that followed. One issue that surfaced again and again for this community was the need for agility in the business. And not just agility within IT, or for specific projects in IT, but agility within the entire organization.

Sitting here in Connecticut, I can almost hear the collective groan of the blogosphere at the very mention of the word ‘agility’, but let me explain what I heard from these global CIOs and why it resonated with me.

Much of the discussion that took place focused on the need for agility within the entire organization to drive performance improvement, rather than just one part of one team being agile while the modus operandi of the rest of the organization is business as usual. The concept of two-speed IT, or bimodal IT as we call it at Gartner, was debated at length by global CIOs because, in their experience, it’s impossible to isolate the impact of innovation on just certain parts of the organization. In their experience, it’s not sufficient for just one part of the organization to be agile because every part of the organization has to respond to the requirements, changes and demands that result from innovation! If innovation is really to drive meaningful improvement, the whole organization, both IT and the entire organization, must be able to respond quickly and work together at the same speed to implement change.

So, if two speed or bi-modal IT is where we are today and there’s a need for organization-wide agility, what role can the CEO and CIO play to drive this change?

Agile starts with the customer and a competitive situation requiring agility; an outside-in approach to agile. Being an agile organization means realizing what Gartner calls Business Moments. Being agile does not start with taking an IT development methodology and then making it an organizational approach. That would be an inside-out approach to agile. In the digital industrial economy CEOs need their organizations to respond rapidly. CEOs need to articulate what being agile means and hold their organizations accountable for the change that is required to meet this goal.

CEOs are constantly asking their global CIOs to be increasingly responsive and to get ever-more stuff done faster. Call it agile, call it organized chaos if you like, but this challenge is not new; how to work faster, smarter, better. What is new is that you can not ask one part of the organization to be agile, the IT organization, and then not have the rest of organization act in the same manner. This was what several of the CIOs noted. They know their IT organization can become agile.

CEOs know they will be challenged internally by their organization’s culture and performance management systems, but their biggest challenge is to ensure the entire organization, not just IT, acts in a consistently agile manner.

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The Only Certainty Is Change for CIOs In 2014

by Peter Sondergaard  |  January 30, 2014  |  Comments Off

Earlier this month, a team led by my colleagues Dave Aron and Graham Waller published the results of Gartner’s annual CIO Agenda survey.

Overall, the survey revealed that CIOs do not feel prepared for the next era of enterprise IT, something we at Gartner call digitalization – The Digital Industrial Economy. CIOs responded to say that they often feel overwhelmed by the prospect of building digital leadership while, at the same time, renovating the core of IT infrastructure and capability for the digital future. The survey found that 51 percent of CIOs are concerned that this change is coming faster than they can cope and 42 percent don’t feel that they have the talent needed to face this future.

The survey, which was conducted in the fourth quarter of 2013 and represents the views of more than 2,300 CIOs in 77 countries, is summarized in a report we published for clients that highlights the need for CIOs to respond to the dual goals of effectiveness and digitalization.

The themes that emerged from the survey reflect many of the trends we we discussed during our Symposia around the world in October and November 2013 and will explore at our upcoming Gartner Symposium/ITxpo in Dubai.

Dave and Graham point out that during the first era of enterprise IT, the focus was on how IT could help do new ‘stuff’ — automating operations to realize huge improvements in speed and scale, while also providing leaders within the business with information they never had before. The last decade represented the second era of enterprise IT, an era of industrialization of enterprise IT, making it more reliable, predictable, open and transparent. But, while this second era has delivered real benefits for organizations, rigorous budget control and little appetite for risk has left little to no room for innovation.

Technological and societal trends, such as the Nexus of Forces and the Internet of Things, are changing everything in the third era of enterprise IT. Digitalization is not only improving what businesses do with technology to make themselves faster, cheaper and more scalable, but fundamentally changing businesses with information and technology, changing the basis of competition and in some cases, creating new industries.

The report points out that CIOs are facing all the challenges they have for many years, plus a flood of digital opportunities and threats. Digitalization raises questions about strategy, leadership, structure, talent, financing and almost everything else as all industries in all geographies are undergoing digital disruption.

I was also interested to learn from the survey that CIOs reported that a quarter of IT spending will happen outside the IT budget in 2014. As the authors note, this is probably a conservative estimate because this only accounts for the spending CIOs know about; the reality may be significantly higher.

Finally, Dave and Graham stated that there is an inherent tension between doing IT right and doing IT fast, doing IT safely and doing IT innovatively. Whereas the second era of enterprise IT has been all about planning and doing IT right, CIOs now need to deal with speed, innovation and uncertainty. This requires a concept we call bimodal capability, which means operating two modes of enterprise IT at the same time; conventional, or “safe and steady” IT, and a faster, more agile nonlinear mode.

In a future blog post, I’m going to explore what CEOs should know introducing a bimodal capability into their organization, and how to engage their CIOs in the shift to this strategic capability. Is this a journey you are already on? Have you started to address this fundamental challenge? I’d like to learn more about your experience for my next post.

If you are client, a detailed analysis is available in the report “Taming the Digital Dragon: The 2014 CIO Agenda.”

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